How can development be conceived? The answer, in our opinion, is
anything but obvious. This text is intended to seek an answer to this
question and to present a number of historical and contemporary
examples underlining our views. In general, development apparently is
conceived as the expansion of possibilities by a process of
accumulating increasingly greater means to advance development. In
other words, this is a perspective of mere quantitative growth.
However, development is also characterised by qualitative jumps. Thus
the question arises: When does a quantitative process transform into a
qualitative process? What are the reasons and what are necessary
conditions for this to happen? One of the most advanced models to answer these
questions is the Five Step Model we present in the following.

The Five Step Model has been influenced by a number of precursors. For
one, Georg Wilhelm Friedrich Hegel, one of the most important idealist
philosophers, developed a formal system of the sciences. In his
Â»Science of LogicÂ« [Hegel-Logic] he analyses the relationship between
being, essence and concept, and how one develops into the other. His
notion of development, however, is purely logical, not historical. It
was Karl Marx1 who joined Hegelian dialectics to
history and who discovered principles of historical development. Quite
contrary to Marx' own views, the ensuing Marxist movement translated
these principles into Â»lawsÂ« by oversimplifying and formalising Marx'
original analysis. Thus, Friedrich Engels propounded the Â»three laws
of dialecticsÂ« that have been used by generations of Marxists.

One prominent aspect Hegel emphasises is that the principles of
development can and should never be separated from the subject of the
original analysis. Why so? The danger of any law formulated in terms
of a general statement is obvious: The law once discovered by studying
a specific subject is applied to another subject and now guides the
analysis of this new topic. In other words, this so-called law works
as a pair of glasses that filters one's perception and predetermines
whatever can be viewed and conceptualised. Nevertheless, there are a
number of general principles of development, and how change takes
place is not arbitrary. But any analysis must be careful and take into
account, that each concept functions as a filter. This also applies to
the Five Step Model we present here.

It was Klaus Holzkamp, the founder of German Critical Psychology,
who--in the Hegelian sense--pursues an in our view viable approach: In
a first step, he analyses his subject and discovers its principles of
development. In his opinion some of the Marxian and Hegelian insights
have to be specified in more detail. His aim is an explication of the
historical evolution of the psyche in phylogenesis. From this starting
point, the generalisation of his specifications covers five steps.
With Holzkamp's views, the core of the Five Step Model was born.

The next step in the development of the Five Step Model was the
transmission of the model from phylogenesis to the history of society.
Being aware that there are qualitative differences between evolution
and human history, Stefan Meretz assumes, that on a general level
there are also similarities. It would be wrong to explain human
history in an evolutionist fashion, but there are comparable
structures of development, which can be transfered. However, this has
to be verified by transforming and applying the Five Step Model to the
new subject-matter of human history. Two examples are presented in
support of our position. If our views can be
sufficiently supported, we will gain a powerful tool to analyse
contemporary and new phenomena such as Free Software and we will be in
a position to address the question of how capitalism can be overcome.

Essentially we will try to show that the results of our examination
lead us to a new understanding of the qualitative transformation of
society. Our findings are not new in the sense, that the aspects we
have found have never been thought of before. So, don't let yourself
be carried away too easily into a warm (or cold) feeling of agreement
(or disagreement) when some aspects sound familiar--the overall
picture we give is quite new. Of course, we stand on the shoulders of
giants, too [Wikipedia-Shoulders].

While we attempt to explain the skeleton of the Five Step Model in the
following, keep in mind what has been said until now. Holzkamp
generalises his Five Step Model of development from research on
qualitative steps in phylogenesis on its path towards the development
of human society. Here are the headlines which we will put forward in
detail later:

Emergence step: emergence of the germ form

Crisis step: crisis of the old form

Expansion step: germ form becomes an important dimension

Dominance step: germ form becomes the dominant form

Restructuring step: Restructuring of the entire system process

These steps are not to be understood as chronological in order, but
rather as logical. To introduce you to germ form theory let us first
sketch an example from evolution, which we will use to illustrate the
steps of the model. The example is taken from the Holzkamp book
[Holzkamp-Grundlegung]:

Simple organisms moving around in water depend on the environmental
conditions they live in, because they sustain by the assimilation of
nutrition from this environment. By moving to nutritionally rich
regions they heighten their chances and improve their ability to
survive. Orientation plays a crucial role. Early forms of visual
orientation, of Â»seeingÂ«, are coupled with motor skills. Light and
dark areas in the surrounding are detected via the sensible surface of
the organism during locomotion (scientifically: Â»gradient
orientationÂ«). Now, let's assume that lighter regions systematically
contain a higher amount of nutrition. These water organisms use the
environmental differences in illumination in order to find
nutritionally rich regions; this increases their possibility to
survive. However, for these organisms depending on their ability to
move in order to find orientation, locomotion, on the other hand, is
also a very risky thing to do in an extremely hostile and dangerous
environment. Other organisms, that are able to detect visual
differences from a more remote stance have a much higher chance of
survival because they are independent of their locomotion to detect
nutritionally rich areas; in other words, they have a far lower risk
of lethal movements. The question of development now is: Why and how
does the population of organisms with a simpler structure develop
qualitatively higher forms of orientation? (And we know for sure, that
it did happen!)

Anything that exists on a new level of development appears to us as
being self-evident and ubiquitous. We should keep in mind that the
prevailing principle derived from the observed system did not exist
before, but instead another, an old principle ruled the observed
system then.

In our example above, the system is the population of simple organisms
living in water. They use primitive orientation to help them find
nutritionally rich regions. Everything is fine as long as the
immediate environmental conditions are well for the sustenance and
reproduction of the population. However, these organisms always risk
lethal movements, because their orientation is fully dependent on
their continuous moving around; they have no form of orientation that
would allow them to Â»seeÂ« sappy grounds ahead of them from a long
distance.

New forms always occur as mutants; they are ignored because they are
useless for the time being. There are niches where such mutants
survive. Some mutants represent early forms of new variants for
example of Â»seeingÂ« over longer distances. They are germ forms of a
qualitatively new function emerging during the next steps of
development. We can assert this today, because we know a lot about how
e.g. the visual functions in various organisms have developed in time
and how they work. By analysing we look backward in order to
reconstruct forward to understand what has developed. Thus, our
knowledge tells us: A germ form develops in niches; it survives within
the old modes of sustenance and reproduction, but has new features
that will become dominant in the future. On a current stage of
emergence, these germ forms--mutations and deviations--are new
functions, perhaps as useless for reproduction and survival, as other
non-germ form deviations. Whether these new functions become useful is
decided during the next two steps.

A new form receives a chance for further development, only if it is
able to play a positive or decisive role in the given system based on
the old forms. On the other hand, an existing old form only requires
new forms, when the existing system can no longer reproduce itself as
successfully as before. When the old forms and principles no longer
work efficiently, the old system runs into a crisis.

A crisis can be the result of inner or outer disturbing conditions or
causes. Often it is due to changes in the environment of the given
system. In the case of our simple water population, for example, the
nutrition level can decrease. Changes in the environment generate
inner contradictions. The given system may, in some cases, be able to
cope with these contradictions on the basis of the old principles; in
other cases, it may not.

Even more interesting are inner conditions of a crisis being
transformed into inner contradictions. This is the case, when all of
the potential for further development immanent to the given system is
exhausted while the system faces new challenges that it cannot deal
with the existing resources. For instance the population of our
simple organisms grows to an extent, that the speed of its locomotion
and the precision of its orientation become critically slow and
imprecise so that it fails to reach new nutrition regions early enough
to prevent starvation. Thus, this system of organisms runs into a
crisis due to its own successful development. Grown too large in size,
on the basis of the old form of orientation and movement it is unable
to meet the challenge of increased nutritional needs.

Now, there are three possibilities of what can happen: stagnation,
collapse, qualitative development. In the first case, a part of the
population starves and the system stagnates within the limits of the
existing conditions and on the old level of its functioning. In the
second case, the growth of the population is so rapid that the whole
population collapses and disappears. In the third case, a
qualitatively new property develops within the population which
enables further growth and expansion. We will follow the third option,
and our candidate for this is the already existing germ form from the
emergence step, as shown above.

Under the conditions established by the prevalent old principles and
the ensuing crisis the relatively new germ form can leave its niches
and expand quantitatively. This is possible because it is needed for
further development. It becomes an important and qualitatively new
dimension of development within the old, as yet dominant form. The
establishment of the germ form within the old logical system can have
two results: First, it can lead to an integration of the new form into
the old one, whereby the the old form assimilates the germ form,
accommodating, adapting and modifying itself due to this process only
slightly. Second, the germ form performs continuously better and
establishes itself side by side the old principles of the given
system.

In the first case the germ form character is lost. In the second case
the new features encompassed by the germ form are strengthened. In
both cases the old system benefits from an integrated and strengthened
germ form. Thereby, the old system attenuates its own crisis
phenomena. Moreover, it is a key precondition for the development to a
next step that during the germ form phase of expansion, these new but
disparate principles be in the service of the logic of the old system:
i.e. the new system must work for the old one, otherwise it will be
absorbed or defeated by the old prevailing system.

At this point, it is very important to understand the dialectics of
this step. Using dualistic logics, one would say, that a new form is
either incompatible or compatible with the old one. There is no third.
This concept of Â»tertium non daturÂ«, also known as Â»principle of the
excluded thirdÂ«, dominates contemporary thinking, and workers
movements have not been free of it.
Dialectic thinking overcomes and includes dualistic logic by
recognising the relationship between the opposites. In reality
opposites are never isolated from each other. In particular isolating
opposites from each other is not useful for understanding historical
processes of development, at all.

Returning to our example, for the first result type, the population of
our simple organisms could integrate the newly developed function of
Â»distance-seeingÂ« into the old form of orientation by using the
improved sensibility of the organisms' surface detecting light-dark
differences. With an improved sensibility the organisms movements will
be more intricate and attuned to environmental conditions so that
lethal risks decrease. However, concerning distance orientation
nothing has changed. A population with a more sensible moving
orientation may be fit enough for the current stage of growth. The
integration is completed and the new function of distance-seeing
disappears, because it is no longer required.

The second result type could be, that the new function of
distance-seeing, which is a special property pertaining to only a
few organisms within the population, enables the whole population to
perform better in reaching higher nutrition levels by using these few
as leaders. Thus, the whole system then takes advantage of these few
organisms with more precise and expedient orientation faculties. The
new function can expand, because it is needed by all. It is helpful to
the whole population even while the old logic is still dominant. Thus,
organisms featuring the new function survive with a higher probability
than other organisms and the new function spreads out over the
following generations.

At this point of development, the former subsidiary germ form becomes
the dominant form of development. The new principles prevail because
they are an improvement in respect to the important dimensions of the
entire development process. At this stage the typical novel character
of the germ form comes to an end. Now, it is its principles that
determine further development. These new principles replace the
obsolete and no longer functional principles of the old form, either
step by step or abruptly. Now the new form becomes self-evident and
ubiquitous.

Becoming dominant is the second qualitative step: First, the germ form
conquers a new qualitative position, where it can no longer be ignored
(expansion step). Then, the new form replaces the old form by now
determining the system's direction of development. This second step
brings along a completely new potential for further developments.
These new possibilities are far more ample and more far reaching
than those that had developed under the old circumstances. However,
before this new potential can fully come to bear, the entire system
needs to adopt the new principles as a whole (restructuring step).

Applying these ideas to our example, the dominance step means that
distance-seeing is so useful for the entire population that
organisms employing the old primitive function of orientation via
locomotion are now at a reproductive disadvantage compared to those
members of the population applying the new function. They vanish, and
the new function will be taken over by all the organisms of the
following generations. This process can be slow in nature, taking many
generations, if there is only little pressure to adapt to the new
conditions; or it can be quite fast, but not too fast, which would
also endanger the survival of the population.

Remember that in case of organisms, the mode of development is over
generations via mutation and selection. In comparison to measures
taken by human societies to engender historical development, this is
very slow. While the time scale of those five step developments in
natural vs. societal environments can be completely different, the
qualitative steps to cross the respective developmental boundaries are
just the same.

When a new form has been established, then the entire system with all
of the other aspects of its life needs to be rebuilt. This
reconstruction of all other subsidiary derivative processes is very
important in order to realize the entire systems new potential for
further development based on the principles of the new form. Now, new
contradictions can occur, new germ forms can occur, the new system can
develop into new crises etc. The first step of a new cycle is reached
again by closing a former cycle. Finally we get a picture of a spiral
where it took five steps to perform one turn ending up on a higher
level where a next turn higher above will again encompass five steps
and so on.

So what, at this stage, has happened to our population of organisms?
Well, perceiving, seeing and scrutinising an object from quite a
distance is now the dominant form of orientation for these organisms,
while other--e.g. motor--functions adopt to these new functions.
Qualitatively new organs of perception have been developed, Â»eyesÂ« in
our case. An improved and qualitatively new orientation now also needs
an improved nervous control. Due to a more precise orientation, moving
organs--fins, claws, tentacles etc.--develop, in order to also
facilitate adaptation and precision of movements. Other functions of
the population system reconstruct themselves and develop further in
respect to the new challenges activated by the new dominant mode of
orientation. However, this, as yet, simple and unrefined form of
seeing is not capable of distinguishing different types of objects
from a long distance; it merely gives approximate information about
the direction in which the organism is to move. Thus, due to further
population growth new contradictions emerge, new germ forms develop
etc. The restructuring step is the first step of a new turn in the
spiral.

While using examples from biology, we delineated the Five Step Model
in a more general perspective. Thus, in many cases historical
processes can be seen in this view. Keeping in mind that the Five Step
Model is not intended to represent a universal model of development,
it is nevertheless always interesting to examine whether historical
processes can be construed in terms of the steps of the model. In the
following, we will do precisely this, using the historical emergence of
Free Software as a case of peer production to show the validity of the
germ form model for historical processes. We
will argue, that the Five Step Model can be used to understand where
we currently stand in an historical process of transformation. This
view sheds new light on questions being commonly answered by applying
formal dualistic logics (market vs. planned economy, labour vs. capital
etc.).

This generalisation of the Five Step Model was first introduced by
Stefan Meretz in the context of the Oekonux project starting in 1999.
Oekonux is an acronym of Â»Economy and GNU/LinuxÂ« (in
German) [Oekonux-Site]. The project is a discussion and research platform for those
interested in the understanding, application and proliferation of the
principles of Free Software and peer production to the entirety of
society. The Five Step Model plays an important role for understanding
the various and partly contradicting phenomena of Free Software; it
guards us from stepping into some of the well-known traps offered by
dualistic logics: Is Free Software in favour of capitalism or against
capitalism? This type of question needs to be rejected, because it
does not help us understand either the principles of Free Software or
its role in capitalism. The only possible answer to this question is
Â»It is as much in favour of as it is against capitalismÂ«; and that
explains nothing. In the following we will show that in using the Five
Step Model we can attain a deep understanding of Free Software and
peer production, both as a general phenomenon and of its role in
contemporary capitalism.

After we gave a sketch about what germ form theory and the five-step
model is, we now give an outline of an analysis for the development of
capitalism using germ form theory. We are particularly interested in
how the shift from feudalism to capitalism can be perceived using germ
form theory, because in the following chapter we give an example of a
contemporary germ form which--according to our thesis--is in its
expansion step.3

If we talk of capitalism here, we are thinking of two main fundaments
of capitalism: Abstract labour and exchange on the one hand and an
industrial way of production on the other hand.

In capitalism societally separated producers buy and employ labour
power, in order to produce commodities, which are exchanged on markets
then. When exchanged the societally average amount of labour being
necessary to produce the commodities is compared. This societally
average amount of labour is the abstract labour and it is expressed by
the exchange value of commodities. However, consumers are interested
in the use value of the goods they buy, which is created by concrete
labour. Abstract and concrete labour are two aspects of one process:
producing goods as commodities. However, in capitalism the concrete
aspect of labour is dominated by the abstract one: It doesn't matter,
which good is being produced--be it milk or bombs. In capitalism the
main goal of production is, that the product can be sold on a market,
and thus its exchange value can be realized.

Capitalism is also an industrial way of production. Big machinery and
mass production is applied, which is beyond what were possible to
organise in a feudal society. This applies to the technical side of
industrial production as well as to the social side necessary to support
the technical side. While in Fordist capitalism workers are only an
appendix to machinery, today creativity and self-education is highly
demanded. We'll come back to this aspect in the final chapter.

According to the five-step model we need to check where these fundaments
of capitalism--abstract labour and commodity exchange as well as
industrial production--appeared in history to find the spots where
capitalism can be seen in its emergence step.

Exchange as just defined is represented well by the money system where
money is an expression of the exchange value. Of course money as a
phenomenon has been around for quite a long time in human history.
However, most of the time money was a mean to facilitate the exchange
of goods. That is what Marx named the C->M->C type of money usage.
Marx distinguished that usage type of money from the capitalist usage
type of M->C->M' where M' > M [Marx-CMCvsMCM]. Only in the second
variant money is capitalist money, capital, as we know it today. As the
formula expresses in this form its function of a facilitator of exchange
becomes secondary and the accumulation of profit becomes dominant.

If we compare the money phenomenon with the example about our simple
organisms then money represents the feature of orientation as such. It
is a common phenomenon throughout many human societies. The original
usage type of money C->M->C is a common phenomenon. The capitalist
type of money usage M->C->M' is, however, a deviation of the common
money usage. This type of money usage is a mutant like the eyed
organisms in our example above.

We can see this mutant in pre-capitalist forms like in the North
Italian cities around 1300 but also in the mercantile usage of money
later on. At that time money existed but in general for the society as
a whole money was a rather marginal phenomenon far outweighed by the
feudal structures which depended on completely different things than
money. It is a historical truth that at this time there were
deviations which later ended up in capitalism but at that time did not
succeed and even vanished again. These are nice examples for a germ
form in its emergence step but which did not realize its potential
immediately.

Indeed also the other major element of capitalism has been seen before
the 18th century. There actually were manufactures involving abstract
labour and sometimes even big machinery as early as in the Roman
Empire. However, as of this time this type of production did not take
off and stayed a niche phenomenon vanishing again after the fall of
the Roman Empire. Instead the feudal organisation of labour involving
peasants and artisans and using crafts as the most developed forms of
production had several hundred years to live.

When looking back from the developed germ form like we do here,
according to germ form theory we can conclude that there were either
elements of the germ form missing or the crisis of the old form were
missing. Indeed probably both is true and so feudalism stayed dominant
until the 18th century and the germ form stayed marginal or vanished
completely.

In the 17th century and 18th century development was more mature.
Especially in Europe the Enlightenment brought up a whole new way of
thinking emancipating at least from the church and revolutionising the
natural sciences. The Enlightenment brought a massive paradigm
change for all of the European society fabric. A paradigm change
indeed for which thinking back beyond it is very hard to do with a
modern mind set--if at all possible.

The breakthroughs in natural sciences posed hard philosophical
questions. In fact they put the whole God centred model of the world
at stake--a development the echoes of which still can be heard today.

Those breakthroughs in the natural sciences made new technologies
possible. These new technological possibilities like big machinery,
however, did not fit into the societal framework of feudal work
organisation. In fact the early industry needed abstract labour which
as of this time was not very common. In fact Â»liberatingÂ« people from
their feudal roots was necessary to create abstract labour power.

Also the industry of this time used money in a new way: It has been
invested not only in machines but also in human labour, and the results
of these investments--the products--have been sold on a market. On the
market the surplus value has been realized and this gave way to the
next cycle. Capital as we know it today was born and for the first
time the mutant of money usage became visible on a large scale on the
historical stage. Indeed the technological development of this time
together with the changes in the overall societal framework made this
positive feedback cycle possible increasing speed of development.

In addition at this time the governance system which feudalism was
based on eroded. Just take Louis XIV. of France as an example of how
much the aristocrat class has separated itself from the real social
movements compared to Carolus the Great (XXX name?) about thousand
years before him. Or think the early revolutions in the United Kingdom
questioning the old governance system more and more in favour of those
parts of society who represented elements of the germ form.

However, none of these aspects would have had much meaning if
capitalism had not shown some potential in terms of improved products.
Indeed from the perspective of the users of these products there were
a couple.

First, the new industrial way of organising labour together with the
improved technology resulted in higher productivity which in turn
lowered the prices of the commodities produced this way. Where money
already played a role this was of course an advantage of the products.
These cheaper products had so much of an advantage over the old home
manufacturers' and guild organised products that these groups
representing the old system started to rebel against this--see for
instance the Luddites [Wikipedia-Luddite].

Second, the mass availability of products was another advantage of the
capitalist model. This was especially useful for those fields where
you had mass consumption. At this time one prominent example is the
feudal lords needing mass production to equip their modern armies.
Today it seems obvious that a mass equipment with uniforms, weaponry
and all the other stuff is only feasible with an industrial way of
production. But also the mercantile field appreciated the mass
availability of products because it made it much simpler--and thus
cheaper--to acquire the products which are sold later on some
arbitrary market.

Third the industrial production--and at that time that meant already
capitalist production--were able to produce things which had not been
possible before. Especially the heavy industries which needed lots and
lots of free workers were able to produce things like railways, huge
bridges like the Forth Bridge and so on. Again war played a big
role here because at least part of the new products like cannons were
weaponry. But of course the germ form already created its own positive
feedback cycle here: Railways were needed for the industrial way of
production and the industrial way of production was needed to have
railways.

Forth the industrial products showed new features like uniformity
which is one of the typical results of a uniform production process as
distinguished from an artisan production process. This in turn
simplified the industrial use of those products because for a uniform
process it is always good to have uniform input--another positive
feedback cycle. Please note, however, that those positive feedback
cycles were no end in themselves. They were necessary to expand the
germ form but if the germ form would not have been useful for the
overall process these positive feedback cycles would have lead
nowhere.

The advantages in the resulting products were the final reason why
capitalism and industrialisation had their major breakthrough. Though
some elements existed in earlier historical phases they were not
mature enough to lead to a breakthrough or the old system was still
too vital. Only at the dawn of capitalism the preconditions were
mature enough to make way for this new mode of production.

As noted once this new mode of production gained size there were
several positive feedback cycles. The most important one was the new
logic of abstract money M->C->M'. Together with the crisis of the old
feudal system these positive feedback cycles through a historically
very short time changed the whole societal fabric massively. They
unleashed a technical development which was unknown to mankind. But
they also unleashed massive social changes--just because the new mode
of production Â»calledÂ« for these changes. In particular the
organisation of human work was revolutionised. Free workers like
capitalism needed did not exist before but are standard today.

Capitalism improved the efficiency of material production at this time
as far as was possible and it liberated material production from the
limitations of the feudal system--namely guilds and the old feudal
system of privileges. Today we see it also as liberation for the
people from the feudal regulations which had been in effect for
several hundred years.

In the early 19th century these features made capitalism an important
part of the overall development process--the precise definition of a
germ form in the expansion step. During this expansion step
contradictions between the old and the new form are a logical
consequence. Indeed if there are no or little contradictions the
supposed new form is probably not really new but can be integrated
somehow. According to germ form theory, however, these contradictions
happen deeply inside and throughout the whole social fabric and they
are not as obvious as one may think.

If germ form theory can be applied to capitalism as a germ form, then
there should be contradictions and dialectical movements. Indeed there
were. The most important probably is how many aristocrats reacted to
the early forms of capitalism: They used it for their own needs.
Especially war and armies are a field where capitalism was just able
to deliver [Kurz-War]. One less obvious common denominator is that
the alienated nature of late feudal wars is nicely reflected by the
alienated nature of capitalist production.

There were even a few feudal Lords which furthered Enlightenment and
with it capitalist values [Wikipedia-Josephinism]. All this did not
prevent capitalism from gaining control over society step by step
obsoleting feudal rule at the same time.

Indeed here is something very important to learn about fundamental
historical changes in general: The roots of the change emerge and grow
in niches but there must be a expansion step where the germ form
contradicts the old system full-scale while being important for the
old system. If it does not contradict fully then there is probably not
much potential. If it does not become important it is not (yet) strong
enough compared to the old system and can be absorbed or vanishes
again.

As we know today capitalism took over slowly and feudal societies have
been replaced by capitalism. This process took time. At least 100
years in the most industrialised countries but even today there are
countries where pre-capitalist relationships are still important. One
of the most important signs of the victory of capitalism over
feudalism is that religion doesn't matter much nowadays2.

Since with capitalism we can survey the development of a germ form
from its early beginnings to its--as we suggest--replacement by a new
mode of production we can also ask: What happened to the dominant
production of the earlier form? Indeed part of the dominant production
of the feudal form was agriculture. In feudalism agricultural
production was really the main basis of the society--be it, because the
big majority of people were involved in it.

Of course as far as the use value of the products is concerned,
agricultural production is still an important basis for mankind.
People need to eat and agricultural products are for eating. In fact
in feudal times the majority of the people literally worked to eat.

Though agricultural production is of the utmost importance it became
an appendix to industrial production step by step. Today agricultural
production at least in the industrialised countries is totally
dominated by the logic of industry and thus capitalism. Though
agricultural production once dominated the social fabric today this is
no longer the case. Though people still need to eat today they do not
work for food but for money--and this difference is important because
it indicates a fundamental change. Indeed this is a typical
development if a germ form is in its restructuring step and takes over
all of society.

If we think of peer production as a new germ form then if peer
production reaches its restructuring step it will have organised
industrial production according to its own logic. And probably as
agriculture today differs largely from agriculture in the feudal ages
this type of industrialisation will look differently from what we know
today.

Following Marxian analysis it is the mode of production which
was the most important driver for the change from feudalism to
something new: capitalism. It was a fundamental change in the mode of
production which changed not only the way goods are produced but the
complete social fabric and--over time--this happened on a global
basis. It was a fundamental change in the mode of production which
ended one era of mankind and started another one.

One fundamental change for the germ form capitalism was the type of
money usage and following from that the dominance of exchange based
societal forms. Of course there are lots of phenomenons which are
based on that--for instance capital and labour and its contradictions
or property relationships to name just a few. But the core of
capitalism is that success of a system based on exchange of commodities
from isolated private producers.

A germ form inside capitalism pointing to a new logic must challenge
this exchange based system or otherwise it will be absorbed by the
dominant logic. And it needs to do this in a way which can be
generalised enough. Otherwise it will stay a marginal phenomenon. A
germ form with the capability to overcome capitalism must be a mode
of production which works beyond any exchange based system--and at
the same time does a better job. Just like capitalism did a better job
than feudalism.

The shift from feudalism to capitalism shows what a change in the mode
of production can mean once it is unleashed. Germ form theory gives us
a perspective to understand how that development happened: In
retrospective we can see how the germ form of capitalism developed.
But--with the necessary caution--germ form theory can be applied to
contemporary phenomenons as well. In the next section we will do that.
We will explain the phenomenon of peer production mainly using the
example of Free Software and show, where peer production is today using
germ form theory.

For 30 years we have been witnessing a tremendous transformation of
global capitalism. We can observe a change from a Fordist to a
neo-liberal accumulation regime, which aims at integrating a growing
number of previously state controlled sectors into a private
exploitation process. This process is accompanied by disconnecting
large parts of society that are no longer profitable enough. However,
another type of disconnecting process is taking place what we call:
the emergence of peer production. This is the focus of the following
chapter.

We are convinced that the reorganisation of social processes around
new modes of production bears the potential to overcome capitalism.
Furthermore, we claim that peer production can be viewed as a germ
form of a new society which is based on a mode of production beyond
exchange, market mechanisms and money. This far reaching hypothesis is
substantiated by the germ form approach. Within the general emergence
of forms of peer production, so far Free Software is the first, the
most developed and the most visible form. Thus, in this chapter we
will examine Free Software in more detail in order to learn something
about the principles of peer production.

By peer production we mean phenomena characterised by a number of
distinct features4.

Though there are a lot of peer phenomena, peer production is first and
foremost about the process of production not about distribution. This
differentiates peer production from say barter exchange or other
distribution related approaches.

Peer production is based on voluntary contribution, not on coercion or
command. Nobody can force others to do anything; and nobody is forced
to obey others. However, this does not mean that there are no
structures. Quite to the contrary, usually there are maintainers who
decide, for example, which contributions to accept and which to
refuse. But there is nobody who can compel others to do anything they
do not want to do. Moreover, nobody is forced to accept the existing
structures as they are. Whenever participants of a project are unhappy
about some aspects of the project, they can try to convince the other
members to change them. If that fails, they can opt to fork the
project: they can break away from the others and establish their own
project based on the results so far achieved together.

Only when the members of a peer production project are open for influences from
outside, the project can appreciate and use all useful ideas and other
contributions, regardless of their origins or convictions. This
unlimited openness is indeed one of the decisive advantages of this
mode of production--at least as far as the resulting products are
concerned. One result of this unlimitedness is the global character
of peer production projects. This global character of peer production
projects is usually mediated by the Internet; thus, the Internet is an
important tool for peer production.

If exchange value is an incentive for a project, alienated objectives
are brought into the project. This is not useful. We all know how
profit orientation in capitalism can ruin the most interesting
projects. If, however, exchange value is not among the incentives,
then the use of the product itself is the only driving incentive for
its production. We call this use value orientation. Peer production
projects have a deep use value orientation, the resulting products are
of a higher quality5. A peer production
process is not limited by the quality which is necessary to sell a
product on the market. Instead most peer production projects strive to
develop the conceivably best product in their respective field. This
is striving for absolute quality, as compared to the relative
quality on an exchange based market. Another result of the missing
exchange value orientation is that ampleness is not viewed as a
threat, but rather as something useful. This contrasts sharply to
commodities which are based on scarcity--i.e. the opposite of
ampleness.

Contributing to a peer production project has strong elements of
Selbstentfaltung6. In a peer
production project Selbstentfaltung is the individual key incentive for the
contributors to make an effort. That is to say that the people making
these efforts do so due to their inner motivation and not for
attaining alienated goals. There is no external incentive, such as to
earn money, so people are able to pursue goals that suit their needs
best. In fact, this Selbstentfaltung-orientation is what makes peer
production an interesting thing for people who are generally
interested in emancipation. Selbstentfaltung really stands for the
maximum possible freedom. One decisive point is that Selbstentfaltung
and alienation are antagonists.

Freedom of the results is both precondition and outcome of the process
itself. This rule transforms the above mentioned openness into a
positive feedback cycle. A positive feedback cycle of this kind is
needed for any sustainable project. This positive feedback cycle also
strengthens the distinctive features of the peer production project.

So far peer production is an easy venture in the realm of digital
information. This is a consequence of two aspects. On the one hand
there is the ubiquitous use of digital machines and networks. On the
other hand the process of digital copy is independent of the meaning
of the copied digital information. We say that digital copy is
universal with respect to the copied content. In the following we will
discuss the emergence of Free Software and Free Culture as subsidiary
developments within the overall process of peer production. These
developments can also be explained by using the germ form theory; at
the same time they serve as further examples to illustrate the theory.
Nevertheless we should keep in mind, that the concept of digital copy
is not directly applicable to the production of material goods.
Whether or not the principles of peer production can be transferred to
the material sphere or what at all that might mean is as much an
interesting as open research question.

As indicated in the designation, Free Software7 is software--i.e. it consists of programs
and data which are needed in order to run your computer or to write
texts, to surf the Internet, to play music or games and so on. In this
respect, there is not much of a difference to the proprietary software
you may be using, say, from Microsoft. Compared to proprietary
software the interesting thing in Free Software is its creation
process, its mode of production.

One important expression of this special mode of production of Free
Software is the openness of the production process. Here, the human
readable source code containing all the know-how is available to
everyone; it can be seen and read by each and every individual
interested. In contrast, the source code of proprietary
software--which in short is software built the capitalist way--are a
well-kept secret8. Vendors of proprietary software take
great efforts to prevent any unauthorised access to their source code.
This secrecy in proprietary software is needed because the access to
the know-how contained in these sources might give competitors an
advantage. In this respect the source code of proprietary software is
very similar to other business secrets.

As mentioned before, in Free Software this source code is openly
available to everyone. In fact, it is a stated goal that others should
be able to learn from the know-how contained in the source code
[GNU-FreedomRights]. Even more, if you have the source code of some
software at hand, you can improve it by changing and adapting it to
your own personal needs and preferences. In fact, this is a further
stated goal of Free Software. By contrast, usually the vendor of a
proprietary product will also want to earn money from selling
modifications of or amendments to the original product9.

A further aspect we would like to point out is how the mode of
production influences the particular way in which a production process
is organised. Let me explain: For a proprietary software vendor it is
vital to hide the know-how from competitors. Thus, you have a closed
process. In fact, the secrecy employed by proprietary software vendors
is an inalienable feature of that mode of production because the
production process is based on exchange. For Free Software, however,
openness is not seen as a hindrance, but rather as an advantage for
the production process. So even this small part of the big phenomenon
gives us some hints on how the mode of production we see here is
different from what we know from capitalism.

Another important expression of this alternative mode of production in
Free Software is the right to share the results of the production
process. Indeed, this type of sharing is fiercely fought by the
proprietary software vendors for their products. For proprietary
software the type of sharing which is expressly allowed for Free
Software is known as pirate copying--quite probably you heard of it.
For Free Software, however, everyone is entitled to distribute the
software10. And this is precisely what happens.
There are huge repositories of Free Software. Here, you are not only
allowed, but also very welcome to simply help yourself by taking
whatever you need. And there is nothing you have to give in
exchange. One aspect of this right to share has entailed that most of
Free Software comes indeed without a price. Partly this is due to the
fact that a lot of Free Software is created by volunteers during their
leisure hours.

These aspects of Free Software development again show the new quality
arising in this specific mode of production. These fundamental
features make it impossible to make a piece of Free Software a
commodity in the capitalist sense. Existing Free Software is readily
available to everyone; scarcity as the basis for a commodity simply
can not be created. When there is no scarcity of a good, you can not sell
it--why should you pay for something, you can get for free?

Now that we have a rough idea about Free Software and peer production
let's look at how Free Software came about historically. Indeed it can
be seen as a germ form development process in the realm of software
production.

Free Software started out in the 1980s. A good part of the initial
initiative for Free Software came from Richard M. Stallman who started
the GNU project in 1983 and founded the Free Software Foundation in
1985 [Wikipedia-GNU].
Richard M. Stallman had worked at the MIT and from the practice there
he was used to a very open style of developing software. Before the
1980s software was generally considered an add-on to the expensive
hardware--rather like a manual for your new TV. People who worked with
software were used to a free and unhindered flow of software artefacts
and to changing these artefacts to their own needs. Mr. Stallman loves
to tell the story where he was suddenly confronted with a new era in
which software became a commodity [Stallman-Printer]. He personally
ran into the limitation that to be a commodity software must be made
scarce and secret--the exact opposite of the practice Stallman was
used to. The end of that story was that Stallman founded the GNU
project and created the first Free Software tools [GNU-Manifesto].

As is typical for a germ form during the emergence step, in the
eighties of the last century, the phenomenon of Free Software was
hardly even discernible. The term Open Source--may be better known
than Free Software today--was invented 15 years later and main stream
media did not notice Free Software at all. Nevertheless, the experts
in the field became acquainted with Free Software by the communication
channels and forums already existing in the Internet that was slowly
emerging11. Thus, the open development process and the
sharing of Free Software did lead to the formation of communities who
wrote Free Software and made it available by the means of their time.

Many experts in the field of software development experimented with
Free Software that was available. Let me (Stefan Merten) give you a
personal example. During my first job I needed a C compiler that ran
on an SCO operating system. SCO delivered a C compiler as part of the
operating system. It did, however, have some really bad bugs that
introduced errors into your programs. Proper programming is a
difficult enough task. So the last thing you need is buggy tools that
even add to the errors, you yourself are making. In this desperate
situation, I tried out the GNU C Compiler which was one of the
initial GNU products. I was thrilled, instantly, because it worked out
of the box and--most important--it had no errors, whatsoever. Like me,
many experts were quickly convinced by the Free Software products
available at that time.

A next important step was taken in the early 1990s, when Linus
Torvalds created the Linux kernel. This kernel, together with the big
amount of GNU software already at hand, led to the development of a
complete operating system based exclusively on Free Software
[Torvalds-LinuxAnnouncement]. For the first time in history, you were
not only able to run Free programs on a proprietary platform, but also
you had a system in which everything--from the very basis to the most
sophisticated application--was Free Software. In contrast to the
earlier Free software projects, the Linux project also employed a
different development style. This style was first portrayed by Eric S.
Raymond [Raymond-CathederalBazaar]. It was even more open in
character than the one employed by the GNU project, and, together with
the quickly growing availability of the Internet, it brought the final
breakthrough for Free Software.

Though the movement gained momentum during the 1990s, it was still
difficult to discern the phenomenon of Free Software. Among experts,
however, Free Software, in the meantime, was already well known. Quite
often, technical staff in big companies began to use Linux boxes,
while the official management still swore by Microsoft and other
proprietary software vendors. In 1998 then, when the Open Source
movement hyped up, those same managers proudly announced, that they
had already a Linux box running. Ironically enough, only a few months
before, these guys didn't even know, that Free Software existed.

While the historical development of Free Software, in itself, is
interesting, in our context, it is far more important to see, that
right from the early beginnings, the phenomenon of Free Software has
shown the very two key features, which we consider to be crucial for a
contemporary germ form and which are deeply embedded in the mode of
production of Free Software. The first key feature is the
non-alienated nature of the production process. When Richard M.
Stallman started the GNU project, he was keen on creating the best
software thinkable in order to replace the proprietary variants of the
Unix operating system which existed at that time. A motivation of this
kind is fundamentally different from that, wanting to sell a
commodity. When you want to sell a commodity, it completely suffices
to create something which is sellable. Absolute quality is not a goal12.

This is different in the case, when interested experts work on a
project. They do contribute because they are able to employ the best
of their abilities and because they are proud of doing so. They do
contribute to create the very best possible. In other words: When you
take the effort to produce software on a voluntary basis, then you are
interested in the use value of the resulting product. As mentioned
above, this non-alienated relation between the effort taken and the
result of that effort is an important aspect of what we call
Selbstentfaltung.

The second key feature which we have been seeing all along is the
unlimitedness of the project. This unlimitedness comes in two ways.
Free Software projects are unlimited externally in that everyone can
use and share the results of that Free Software project. However, Free
Software projects are also unlimited internally in that anyone
interested can make his or her contributions to the project. That, in
fact, really takes place. Every user of a piece of Free Software can
talk to its developers and contribute the desire for a certain
feature, a bug report13 or even pieces of code. In fact, in
many Free Software projects there is no clear division between inside
and outside. Instead there is a continuum in respect to how far a
contributor will or will not be involved in a certain project.

While the internal unlimitedness is usually achieved by open mailing
lists, wikis, or forums, where users can present questions and
contributions, the external unlimitedness is warranted by Free
Software licenses. Free Software licenses are the legal means we have
in order to embed the phenomenon of Free Software into a predominant
capitalist environment [Merten-Licenses]. Indeed, today the GNU
General Public License (GPL) is the most commonly used
license; it is one of the very early achievements of the Free Software
Foundation. Amusingly enough, the GPL is a genius hack which uses the
logic of copyright to turn it against the idea of copyright: Whereas
normal copyright restricts the use of the pertaining material, the GPL
gives you a lot of rights.

While Free Software was slowly developing in various niches, a major
crisis was evolving in the proprietary software world. This crisis
mainly spread out within the area of medium sized server operating
systems and the associated software. For the relatively rare and
expensive mainframes--for the so called Â»big ironsÂ«--special operating
systems were available. Customer software was developed in-house for
these mainframes. On the other hand, after the invention of the IBM
PC, there was a tremendous surge in the field of small personal
computers, which mainly ran Microsoft operating systems, and for which
there was a great variety of commercial off-the-shelf software
available.

For the relatively numerous medium sized workstations, Unix was the
perfect operating system. Among experts in the field, Unix, to this
day, has been considered an operating system with a few, but ingenious
concepts. The most ingenious characteristic is probably the building
block system which allows you to build complex functionality from
basic building blocks. Nevertheless, after a long open history, Unix
eventually turned into a proprietary system, with different vendors
having developed different versions of it14. Here the
problem arised, that these versions were incompatible--which is
understandable, when you keep in mind, that each and every vendor
strives to sell a set of unique features that differ decisively from
those of his competitors. [Weber-SuccessOpenSource]

It is commonplace that in big, coupled systems, network effects are
tremendously important for market growth to take place. This is
especially true for software, where a product is the more useful, the
more computers you can run it on, and the more users apply it. To gain
network effects, then, you need standards that unify different
products to the extent that they are interoperable. Standards,
however, come in two flavours: On the one hand, there are official
standards which are defined by a more or less powerful standardisation
institution. These standards are open because usually they are readily
available and they can be followed by everyone. On the other hand,
there are monopolies that define standards rather implicitly.
Proprietary monopolies are not open in that they embody only a certain
set of practices. These practices are not documented on a regular
basis; they can change in unexpected ways and at any time, making it
dangerous to rely on them at all.

Microsoft serves as a good example to demonstrate, how network effects
are attained by monopolies. Even though the quality of Microsoft
products has often been mediocre in comparison to those of competitors15, Microsoft has managed to leverage the network effects
that were set off with MS-DOS.

For the medium sized workstations, there was neither a monopoly, nor a
common general standard, that could have unified the technical basis
of the different vendors sufficiently. Actually, there even were
attempts to create such a standard, but these never took off. As a
result, eventually, the Unix market died off. As a result, in
1980s/1990s many experts in the field were worried that Microsoft
would prevail by extending its monopoly to those middle sized servers.

Parallel to these developments, however, the germ form of Free
Software had also grown enough to restore hope. During the 1990s, it
became more and more common to use GNU software and the GNU/Linux
operating system on medium sized servers. In fact, the Internet today
is inconceivable without Free Software. One of the major success
stories in this field is the Apache web server16:

Apache has been the most popular web server on the Internet since
April 1996.

Side by side with the World-Wide Web, e-mail is the other most
important Internet service which is firmly based on Free Software. In
addition, all of the software running the basic network infrastructure
is, for the most part, also Free Software17.

So when we regard the ongoing expansion of the use of Free Software on
the server side it seems justified to assume that Free Software has
the potential to win the competition as far as the servers are
concerned. Even though today we take notice of a large-scale
endorsement to this view, the consequences of this development can be
all but overestimated: A new mode of production embodied by Free
Software is potentially able to overcome the traditional mode of
production embodied by capitalism in one of the most important and
advanced facilities of our time! In fact, this might be the only
example of its kind since the shift from feudalism to capitalism.

Even though the server side may be considered won, the final frontier
for Free Software is the desktop. As mentioned above, Microsoft has
been able to leverage network effects and still holds a near-monopoly
on desktop computers. However, our hopes are rising that step by step
this monopoly will also be overcome by Free Software. The most
interesting development during the past years is probably the Ubuntu
software distribution bringing Free Software to an ever greater number of
desktops.
Microsoft, one of the richest companies on earth, will probably have
to suffer the greatest losses if Free Software does continue to gain
momentum. So it is interesting to see the reactions of this
multi-national company. The history of Microsoft's reactions can be
summarised well by a quote from a well known non-violent
revolutionary:

First they ignore you, then they ridicule you, then they fight
you, then you win.

For a long time, at least officially, Microsoft ignored Free Software.
Internally, however, studies on that new phenomenon and what it could
mean to Microsoft [Raymond-Halloween], were conducted. Then, for a
short period, Microsoft publicly ridiculed Free Software. Finally,
Microsoft began to fight Free Software. This has been going on in many
fields. It started, for instance, by comparing Free Software with
cancer [Microsoft-Cancer]. Then, a great number of times, Microsoft
did whatever they could to keep the governments of developing nations
from adopting a Free Software strategy [Microsoft-ThirdWorld]. Today,
Microsoft is beginning to embrace companies earning money by selling
services associated to Free Software [Microsoft-Novell].

Free Software has been declared dead and gone ever so often, during
the past 25 years; nevertheless, as always, it is still alive and
doing very well. According to our own analysis, the very reason for
this is that a number of fundamental principles of Free
Software--namely the possibility for Selbstentfaltung and the
unlimitedness--can not be copied by the capitalist logic. Capitalism
can not cope with unlimitedness because you need scarcity to sell a
commodity. Copyright is a way to make information goods scarce and
thus subject to commodification. Copyleft turns this around and
destroys scarcity. On the other hand, Selbstentfaltung is the opposite
of alienation. However, the money system of capitalism is built upon
one of the most massive alienations mankind has ever seen, so far, and
alienation destroys Selbstentfaltung, at least to some extent. If the
reasons for the success of Free Software in fact do lie in
Selbstentfaltung and the unlimitedness, then capitalism will not be
able to cope with this unless it relinquishes its fundamental
positions. In other words: Capitalism is not able to absorb the
principles underlying the success of peer production.

Now you might reply: Â»OK, this special mode of production seems to
work for software - but though this is interesting, software is still
only a small part of the worldÂ«. That's true. However, the mode of
production seen in Free Software is applicable to all information
goods where creativity plays a role. Two important examples beyond
Free Software are the Wikipedia and the OpenAccess movement.

You have probably heard of Wikipedia. It's that huge Internet based
encyclopedia which has been created by volunteers during the past few
years. Though the subject of Wikipedia is very different from the
subject of any Free Software project there are still a lot of
commonalities. Most important, both are information goods. Above,
both, Wikipedia, as well as any successful Free Software project, have
a visible and a worthwhile goal which can be shared by many. This, in
turn, will attract many knowledgeable contributors, which makes the
whole thing even more interesting for an even greater number of
people, which in turn attracts even more contributions... As you can
see, the positive feedback cycle is exactly the same in both cases.

At the moment, Wikipedia is facing serious governance problems. As
opposed to Free Software, the biggest problem probably lies in the
fact, that Wikipedia is dealing with information that influences very
directly a great number of areas in the whole world. On the one hand,
that's nice; it is an indication of Wikipedia's success. On the other
hand, it attracts the attention of many groups who want to modify this
information to suit their own interests. This poses serious problems to
Wikipedia. Free Software projects have also had to deal with governance
problems. Often they were able to solve them in one way or another.19

Even though you might have heard of Wikipedia, quite probably you are
yet to be introduced to the OpenAccess movement [Suber-OpenAccess]. The OpenAccess
movement is a movement grounded in the scientific community, more
specifically in the natural sciences. Scientists from many fields
began to demand that the results of their research should be free and
publicly available. This contrasts sharply with the established
practice of publishing research results exclusively in scientific
magazines.

During the era of the print media, publications in scientific
magazines were probably the most appropriate way to communicate; now
however, in times of the Internet, print media seem inopportune and
obsolete as means of transmitting information. This, plus the
so-called magazine crisis--which arose due to the tremendous price
increases of various scientific publishing houses--led to a number of
initiatives currently creating publicly available scientific magazines
directly in the Internet [Merten-Berlin4].
It is noteworthy, that this common practice of publishing openly has
had a long history in the sciences. The technical possibilities made
available by the Internet can help this practice and logic to expand.
Nevertheless, also in this case, the scientists motivation and their
interest in good research are at the root of this development.
OpenAccess style science suits their Selbstentfaltung better than
traditional approaches.

Apart from the examples mentioned above, there are plenty more
phenomena of cultural peer production out there. The blogosphere, for
instance, can be considered another peer production phenomenon. Or
take Jamendo or similar sites, in the field of music, that distribute
music under the CreativeCommons licenses. Especially in South
America, there are interesting developments in music and in the
cultural arts, in general. Finally, there are also peer production
models with a commercial component like MySpace, Flickr and similar
platforms.
In summary, it can be stated that the Free Software initiative has
been setting off a growing number of peer production projects in other
fields. However, so far all of these projects have been restricted to
the informational sector.

In fact, it is in the field of the production of information through
which the main front-line between the old logic and the new logic
runs, today. In the capitalist system, copyright and its restrictions
have been in effect for a very long time. Indeed, copyright privileges
and laws were actually established at the very point in history, when
it became possible to make money with what today is called
intellectual property [Wikipedia-CopyrightInvention].
Other laws and regulations concerning intellectual property, such as
patents, have also been in place for very long. However, in the course
of the last decades this area has been attracting increasing
attention. In 1967, for instance, the World Intellectual Property
Organisation (WIPO) was founded, and has, since then, been trying to
refine and implement restrictions on the flow of information,
world-wide.

These new front-lines concerning intellectual property run through any
of the pertinent fields. Let me draw upon the sciences again, to
demonstrate this. On the one hand, those scientists involved in peer
production join the OpenAccess movement. On the other hand we see how
universities are urged to lock away their information and to run for
patents. It is fascinating to watch the developments of these two
opposing movements in respect to one and the same subject-matter. In
our view this is an indication that the development of society as a
whole is at stake.

Software is another good example. In software we have a
copyright; it is the basis of all of the Free Software licenses. But
while a copyright pertains to only a single, identifiable expression,
patents, on the other hand, pertain to ideas. For some years now, in
the USA, there are software patents which make ordinary software
development a dangerous thing to do. This is so, because software
patents are granted for the most simple and obvious ideas. This means
that you or I could easily develop a piece of software which violates any
one of the innumerable software patents existing, not even knowing
about the trouble we have got ourselves into.

In practice software patents are mainly held by large companies with
large software patent pools who also have non-aggression-agreements
with other big players having their own patent pools. Needless to say,
software patents restricting the use not only of software, but even of
ideas, are completely contrary to the spirit of Free Software.
Software patents pose a real danger for Free Software because
developers of Free Software have no big patent portfolio to negotiate
with. As a result, it is easy to endanger a Free Software project by
claiming that it violates a software patent. And this is something
that does happen [Hibernate-Patent].

In the USA, software patents are a fact. In the EU, to this day, they
have been able to be prevented. In fact, this was one of the rare
occasions upon which the Free Software movement materialised and
fought for its rights with classical means, such as demonstrations.
Together with a number of small and medium sized software businesses,
the Free Software movement was able to keep the EU parliament from
passing a law that would have introduced software patents in the EU
[Register-EUNoSoftwarePatents].

There are many more examples showing that the front-line of
intellectual property is very important. The attempts to privatise
life itself by claiming patents on genes and organisms is one such
instance. Another instance is the continually rising number of
attempts to enforce patents on medical drugs. The problem is that many
medicines can be produced at a very low cost. Common sense says that
this is good news, because the people in need of them can thus afford
them. Because, however, the pharmaceutical industry can not earn a lot
of money by selling cheap medicine, they are not interested in putting
these drugs on the market. As a result, the medical drugs are not
produced and not sold at all; also because the developing countries
particularly interested in them are not allowed to produce generics
due to the patents on them. As a consequence, ever so many people in
the developing countries suffer and die from illnesses which could be
treated rather easily [MSF-Generics]. So if you have been looking for
a further proof and demonstration of the inhumanity of the
intellectual property system, here you probably have found a very
convincing example.

In the field of software, it is safe to assume that according to germ
form theory the expansion step has been reached. Today, Free Software
is an important aspect of development within the prevailing old
form. For other fields this can not be assumed with the same
certainty; but, as mentioned, we have found a number of promising
examples which point in the right direction.

Let us keep in mind, that at this stage, approximately in the middle
of a long revolutionary era, according to germ form theory, we are
witnessing the onset of a new mode of production with a new logic
replacing the old one, step by step. Presumably, a major change in the
mode of production equals with a change of paradigms--with an extremely
deep impact on the further course of human history. Therefore, at this
point in the middle of the process, nobody can be expected to predict
its consequences or the final result. In addition, on the expansion
step, the old and the new logic are both strong; thus, contradictions
are not an exception or an accident, but a logical necessity.

When looking at Free Software, for instance, people are often puzzled
by the fact that Free Software developers still need a job and money
to make a living. Well yes, of course, that's true. But that's not a
problem. Free Software developers, to some degree, already live in
both of these worlds. At present, the process of overcoming the old
structures has not yet proceeded far enough in order for us to be able
to rely on the new forms completely. But this type of contradiction
does not imply that it is essentially
impossible for a new logic to overcome an old one--all it needs is
time and effort.

We would like to emphasise again that what we see today is not the
final stage. Remember: we are in the third of five steps. When
capitalism started its expansion step, nobody was able to envision a
concrete capitalist world 300 years later. Nonetheless, today we are
part of it, and nowadays we are having a hard time imagining a world
based on new and unknown fundaments such as peer production.
This is especially true for the field of material production. Today it
is hard to see how material production can be organised according to
the logic of information goods. Today, indeed, we see a big difference
between digitised information goods which are more or less non-rival
by virtue of the Internet, and material products, where a single
instance of a material product can be considered rival20.

Looking back in history gives us a hint. The production of food in
feudal times was also organised according to a completely
non-capitalist logic. Then we saw that the production of food, step by
step, became subject to capitalism and nowadays has reached a stage,
where food production is simply an annex to industrial and capitalist
production. Thus, it is perfectly possible that in a dominance or
restructuring step, the problem of how to embed material production
into the peer production mode will be solved by means inconceivable to
us as yet.

Humans produce the conditions under which they live by developing the
necessary means and performing the metabolism with nature. The changes
in this relationship between the human being, the means it uses, and
the outside nature (humans themselves are nature) is commonly called
historical development of productive forces. This historical
development was accompanied and reflected by the development of
corresponding social forms, of different forms of societal mediation
over time. The relationship between the productive forces and the
societal form is a dialectical one. The driving factor is the
development of productive forces, however.

So far this may be common knowledge. Now, we have to go into more
detail to bring this in the context of the five-step model presented
before, and it fits very well. Let's see.

The relationship between the three aspects--human being, means,
nature--changes over time not only quantitatively, but also
qualitatively. We can understand history (or Â»pre-historyÂ« following
Marx) as a succession of epochs, where in each of these epochs one of
the three aspects of the development of productive forces is dominant.

The first epoch can be described as the natural epoch, because the
focus of producing the living conditions are directly oriented towards
the use of outside nature. All ancient societies were agricultural
societies. Of course, means are used to ameliorate the land and to dig
for treasures of the soil, however, the means were not in the focus of
development. The main energy to work on the soil comes from humans (as
slaves, serfs, or other types of personal domination) and animals.
Crafts were the most developed form of creating means.

This changes dramatically with the introduction of an industrial form
of production. Industry overcomes the limitations of crafts, of
natural energy sources, and--with the changing societal forms--the
societal restrictions like guilds and booths. The free human is the
ideal of this epoch--free to sell its labour power in alienated
circumstances as we had pointed out in a previous chapter. The big
industry represents the means epoch: Â»The tool or working machine is
that part of the machinery with which the industrial revolution of the
18th century started.Â« [Marx-WorkingMachine]

While social relations during the natural epoch were always dominated
by personal sway over subordinated people, the societal mediation
during the means epoch got an abstract form. Mainly two opposite
classes are bound together via the commodity-money cycle. Each of them
are filling different roles, but both subordinated under those
alienated goals of making profit on the one hand or selling labour
power on the other hand.

Now, we are prepared to understand the deeper sense of the historical
sketch given by Karl Marx in the Â»GrundrisseÂ«:

Â»Relations of personal dependence (entirely spontaneous at the outset)
are the first social forms, in which human productive capacity
develops only to a slight extent and at isolated points. Personal
independence founded on objective [sachlicher] dependence is the
second big form, in which a system of general social metabolism, of
universal relations, of all-round needs and universal capacities is
formed for the first time. Free individuality, based on the universal
development of individuals and on their subordination of their
communal, social productivity as their social wealth, is the third
stage.Â« [Marx-ThreeStages]

Here, Marx describes three epochs, two of them we mentioned above.
There is one missing: The epoch of the Â»universal development of
individualsÂ«, of the human development as an end in itself--the human
epoch. We claim that we live in a transition period, where we can
observe germ forms of this upcoming human epoch every day.

Capitalism improved working with matter and the means employed are
material means. Contemporary industry is perfect in producing material
things. However, the material period has reached it's intrinsic
limitations. What is needed today is the improvement of working with
information and creativity. This is not only required for assembly
line products, but especially for new modern products. The industry is
good at producing well known material products in huge series, where
the production logics are algorithmically fixed. However, the creation
of something new can not be implemented in fixed algorithms.
Creativity and flexible handling of unknown challenges can only come
from living human beings.

Moreover, most contemporary products--even material ones--are based on
a complex set of information. The information aspect of the products
and of the production process becomes dominant during the last several
decades. Using flexible production environments from robots to rapid
prototyping tools changes can be made very fast. Thus, the production
and working with information becomes more and more important. At the
same time the digital copy occurred as something historical new. Using
computers it allows for lossless reproduction at nearly zero marginal
costs. The Internet is nothing but a monster application of digital
copy, it is the global backbone of the production and circulation of
information.

Material goods, however, differ significantly from information goods.
Information can be easily copied while material goods have to be
produced piece by piece. The use of material goods is rival while use
of information is non-rival. Material goods are used up while
information is spread when shared. But most important: The production
of information needs human creativity to an extend the old mode of
production can not support.

These technical developments are preconditions for peer production.
However, peer production is not simply a technical means, it also
changes the social relationships of production. Means of production
are always technical and social.

Here, something Marx' called the Â»universal development of
individualsÂ« comes into play--or with a special German word
Â»SelbstentfaltungÂ«21. The concept of
Selbstentfaltung is similar to self-realization, however, it
overcomes its limitations. Bourgeois society needs the free individual
only in a restricted sense: The individual should be free to sell its
labour power or to command alien labour power. However, the
restriction comes from the enclosure of the valorisation logic, in
which workers and capitalists took opposite functions, but which forms
a unique shell for both. Neither of them can escape, both of them have
to function according to their Â»character masksÂ«.

Marx recognised, that the societal relationships are constituted by
objective relationships based on the exchange of commodities. This
Â»fetishismÂ« (Marx) is the alienated environment, wherein the
individual can self-realize. However, the logics of the commodity
framework, of selling and buying, can not be overcome within this
environment. The basic logic is exclusion. Within the exclusion
structure it is only possible to Â»self-realizeÂ« on the expense of
others. The Â»freeÂ« individual is at the same time an isolated one,
isolated from others and from whole society. To pull oneself at one
owns hairs out of the swamp seems impossible.

The solution to this dilemma is the individual itself, and
Selbstentfaltung is the mode. In contrast to self-realization the
condition of Selbstentfaltung is not to exclude, but to include
others. Selbstentfaltung creates a room of mutual support and
enhancement. Having fun and being responsible joins, because
responsibility is not a moral add-on, but it is the built-in
pre-condition for success. Well known Â»flow experiencesÂ« can be
described as a result of Selbstentfaltung. Wikipedia describes this
experience very well: Â»Flow is the mental state of operation in which
the person is fully immersed in what he or she is doing, characterised
by a feeling of energised focus, full involvement, and success in the
process of the activity.Â« [Wikipedia-FlowExperience]

Selbstentfaltung is not a rare personal property of few people, it is
a genuine mode of individual development of all humans. However, it
needs a special social environment enhancing the inclusion logic. This
environment must minimise alienation and indirection. Capitalism being
based on a few abstract principles contradicts this requirement. The
fetishism in bourgeois society produces alienated relationships. The
use value of a commodity is a subordinated means to realize exchange
value on markets. Thus, making more money from money is the alienated
and indirect form of producing goods the people need.

Selbstentfaltung on the contrary requires direct relations to the
products, to other producers, and to users. The product itself is the
primary goal, not generating profit via selling the product as a
commodity on markets. The cooperation with other peer producers is
essential to get the tasks done, because the peer network is the
social environment wherein the individual acts. And the direct
relation to users is the way getting feedback and reputation. The
better the product, the better the cooperation. And the better the
user relations, the more people join the process and the higher the
possibility to accomplish the goals of the project. The logic of
successively including more people, knowledge, and experiences is a
compelling power overcoming the exclusive principles of capitalist
society. The core of this inclusion logic is Selbstentfaltung, which
can now be defined in a short way: The Selbstentfaltung of the
individual is the precondition of the Selbstentfaltung of others--and
vice versa.

Due to Selbstentfaltung being primarily oriented in the use of the
product, the quality is superior. This follows from the fact, that
design and realization of the product is not limited by marketing
considerations. While exchange value orientations results in relative
quality, the quality orientation in free production modes based on
Selbstentfaltung is absolute. Richard Sennet [Sennet-Craftsman]
compared these modes with crafts, with Â»doing something well for its
own sakeÂ«. In Free Software and free cultural works like Wikipedia he
sees this Â»enduring, basic human impulseÂ« re-emerging, which all
people have and can bring out. Internal openness allows for
contributions from all sources. People are invited to contribute, user
innovation is employed [Hippel-DemocratizingInnovation]. Superior
availability is a direct result of external openness. Often, the
improvement rate is very high.

Universal development is an end in itself. Selbstentfaltung brings out
the best qualities of humans, and at the same time, it is the best
mode of living for humans. Individual being and social embedding, the
one and the many are no longer opposites. However, Selbstentfaltung
contradicts many capitalist principles. Capitalism does not allow for
unlimited inclusion, because it is based on exclusion. Capitalism only
uses cooperation, in order to reach better competitiveness to better
prevail on the expense of others. Efficiency is not oriented in a good
living for all, but simply in maximising profit as an end in itself.
Thus development and production is oriented in goals raising from a
Â»cyberneticÂ« valorisation cycle, what Marx called Â»objective
[sachlicher] dependenceÂ« (cited above), or with another word:
alienation.

Using an systemic perspective during the industrial period, alienation
is not really a problem, because industrial working with matter can be
commanded. And alienation was personally acceptable, because the
Â»objective dependenceÂ« was highly outweighed with good wages. But
high-tech capitalism is based on working with information. Creativity
and individual free development are needed--but they can not be
commanded. At the same time huge industrial structures are separated
into smaller parts, each of them directly subordinated under the
market claims. Class relations which once have been clearly visible
dissolve, each single group and each individual has to be an
entrepreneur, capitalist and worker at the same time. Alienation is
carried to the extremes: Self-valorisation and Selbstentfaltung become
antagonist requirements.

The well known tendencies in contemporary capitalism, generally known
as as neo-liberalism, support the potential to overcome
capitalism--for the first time in history. This sometimes sounds weird
to the traditional left, and it seems, that not much of them are able
to see the germ forms of the new. The potential has to be analysed
carefully, because there are many traps. One trap is to interpret all
the different new phenomenons completely in the framework of
neo-liberalism. Then this sometimes gets the form of a
Â»conspiracyÂ«--behind every development seems to be a plan to suppress
and subordinate the working class. This view neglects the inner
dynamics and dialectics of the ongoing process including the germ
forms which contain the potential for something beyond capitalism.

Another trap is to overestimate the new potential at the current step
of its unfolding. There is an expectation, that the germ form is
already a developed final form representing all the properties we want
to have. This view is often accompanied with the assumption or
expectation of having Â»good peopleÂ« with high level of consciousness
within peer production projects like Free Software. However, this is
neither true nor are Â»good peopleÂ« necessary. It is the strength of
peer production, that there are no preconditions before joining a
common effort of a peer production project. Normal people can
participate.

The third trap is to expect, that the new is free of contradictions.
The new has to occur in a pure and innocent form. However, using the
five-step model, we can understand, that a qualitatively new form
never emerges completely isolated from the old without any useful
function for it. In the contrary, the new must have a useful function
for the old, because otherwise it can not grow. At the same time it
has to contain the potential for a entirely new mode of
production--and this is the case with peer production.

Looking on current commons-based peer projects as Free Software, it
can be learned, that peer production is not only a question of
technical means, but it also changes the social means of production.
The maintainer model mentioned above for instance can be viewed as a
common governance model beyond democracy--commonly named meritocracy.
It bases on reputation and responsibility.

Maintainer and project members are inclusively bound together. While
the maintainer is interested in many and good skilled project members,
those, on the other hand, are interested in having a good and
communicative maintainer integrating all different individuals in the
project and organising consensual decisions. A consensus is reached if
nobody must object. If a maintainer tend to ignore needs of project
members, then they can leave or Â»forkÂ« the project. A Â»forkÂ« is a
split of a projects by taking all of the given results into a new
project, because they are free. However, a fork is always a risk,
because it also means the separation of human resources weakening the
possibility to reach the intended goal. Thus, all opponents in a
conflict have to clearly think about the chances and risks of a fork,
and the chances and risks of a consensus, which drives the dynamics of
conflict regulation.

This differs significantly from Â»democratic conflict regulationÂ« by
voting and representation. All goals and needs come from the people
within the project, and they are focussed around the goal or product
to be produced. Alienated influences are absent. Well, this is the
ideal situation of a doubly free project. While in a singly free
project only the product is free--mostly covered by a free license.
Additionally, in a doubly free project the production itself is
free. This is the case, when money and alienated goals are completely
kept out of the project and all tasks are freely done.

This new type of post-democratic regulation gives us an impression on
how to organise a whole society according to the needs of the people.
Not only peer production projects with specific productive goals can
be done this way, but also infrastructural tasks or meta-projects can
be organised this way.22 This, however, is a quite
different transition image than old style types of conqueroring the
power to control the (old) means of production. The new conception of
a transition bases on changing the productive basis by establishing
new social relationship, which are originally free of valorisation and
alienation. It is not about taking the old power, but building a new
one, which then cooperates-out the old one. This is the fundamental
change of the perspective of emancipation the five-step model brought
to us.

The human epoch, a society based on the Â»universal development of
individualsÂ« Marx dreamt about, becomes a real opportunity.

In fact it seems like religion gains importance
during the last few decades. However, we think this type of
religion can not be compared to the feudal type of religion mainly
because the new types of religion usually have no common church
which is the centre of power as we know it for instance from the
Christian church during the Dark Ages.

But even if the modern fundamentalisms of all sorts are considered
a return of religion this is more an indication of the decline of
Enlightenment than anything else. However, this type of
fundamentalisms won't be able to create new societies which can be
wished for by the children of the Enlightenment.

It should be noted that this chapter is
in some respects work in progress. A thorough analysis of early
capitalism with germ form theory in mind is lacking very much and
probably needs a major historical research program.

A set of criteria to distinguish peer
production processes from other phenomena is work in progress.
There probably is some vague consensus in the research community
around Oekonux but it is not yet settled. See [GermForm-Criteria]
or [Siefkes-Peerconomy] for some suggestions.

In fact there are peer production
projects which have one or another commercial appendix which is not
oriented in use value but in making profit. What this means and how
it needs to be considered is in fact a difficult question which
probably can not be answered on a general basis. Several examples
from Free Software show, however, that it is fundamental that the
core project keeps its use value orientation and the commercial
interests are grouped only around the core process. Indeed peer
production projects with a commercial part are a contemporary
contradiction typical for the expansion step of a germ form.

Actually there are two common terms for
the phenomenon described here: Free Software and Open Source.
Free Software is the older term while the term Open Source has been
coined explicitly as a marketing term striving to strip the
political context from the term Free Software.

On a practical basis the terms are interchangeable in nearly all
aspects. This text will prefer Free Software over Open Source.

Computer programs exist in two flavours: On the one
hand there is the executable code which can be executed by the
machine. This type of code is on a very low expression level very
close to the features of the machine. It is hard to understand for
humans.

On the other hand there is the source code from which the
executable code is generated. The source code is what humans use to
express what they want the machine to do. It is much easier to
understand than executable code and it is far easier to read and
write. While from executable code it is next to impossible to
understand the know how contained in a program a good piece of
source code is exactly made to help this understanding.

On what terms you may redistribute Free
Software in fact is governed by the license which allows you to do
so. The most used license GPL contains the so-called Copyleft
principle which not only obliges you to redistribute the executable
form of the software together with the source code, but determines,
that modified (derived) versions of the software also have to be
covered by GPL when distributed.

Indeed quality in proprietary projects is less
important the more a vendor has a monopoly. If you have a
monopoly--such as Microsoft nearly has on the desktop
market--quality doesn't matter at all. In fact it was the success
of the Free Software Firefox who forced Microsoft do write a new
Web browser replacing a years old product.

The operating system Unix itself has an interesting
history which can not be pointed out here. Its life started as a
very open, university based project and then branched into several
proprietary variants which co-existed with still open variants. The
acronym GNU standing for "GNU is Not Unix" reminds of this history.
However, only GNU/Linux were able to pick up the openness of the
early Unices and become a big success at the same time.

An easy reference for this is the comparison of
Windows 3.1 and the Apple operating systems of that time. When
Microsoft finally released Windows 3.1 it was really inferior to
the operating systems which ran on Apple MacIntosh computers at the
same time. However, the Apple operating systems were also
proprietary at this time and not available for the hardware
Microsoft products were made for and so were no real alternative.

In fact peer governance is a major topic for which so
far there is relatively little research. One of the central
insights (not only) of the Oekonux project is that peer governance
often involves an explicit maintainership including an explicit
maintainer role.

Something is called rival if my use of it prevents
your use of it. Things which are used up by using them, such as
food, are a good example of rival things. On the other hand my use
of non-rival things doesn't interfere with your use of these
things. Radio waves are a typical example of a non-rival thing.

The concept of Selbstentfaltung has been used
in the Oekonux discussion a lot and also in earlier works for
instance in Holzkamp's work (as Â»generalised action potentialÂ«).
Since there is no appropriate word in English and also because the
concept of Selbstentfaltung used here is somewhat new even in
German we decided to use the term in English as well.

In an extensive and hotly debated study
[Siefkes-Peerconomy] Christian Siefkes had shown, that peer
production can be generalised into the physical world and the whole
society can be organised according to the principles of
peer-governance on a global level.